How can i determine my adjusted cost basis on a home that was sold that was owned for 30 years? we no longer have any of the papers and the home was refinanced twice?

[Anonymous]

did you live in the house for at least 730 days in the last 5 years before sale?.   did you ever rented it out and/or take home office deduction?  what was the gross sales price?  if you're married, did your spouse meet the same occupancy rule?  

[debbieborski]

Yes, no, and yes

[debbieborski]

Yes, no, and yes

[MichaelL1 · Accepted solution]

You will have to reconstruct the cost basis the best you can.

The two refinances will have no impact on the cost.

So you would have what the home was purchased for 30 years ago --$$ estimate

Then add the cost of major improments made --additions, remodels, new roof, garage added etc.  $$

Otherwise, if you don;t do this, you would have to use a $0 cost basis.

[Opus 17]

Refinancing doesn't change your cost basis.  Only permanent improvements that add value or extend the longevity of the property, such as a roof, furnace, etc.  You can also only claim improvements that are still part of the home.  If you replaced the roof twice, you can only include the cost of the second replacement.  Repairs that keep the property in as-is condition are not improvements.  You also have to subtract any casualty losses you claimed and any depreciation you took or could have taken for business use of the home (home office, day care, rental, etc.)

You should keep important papers related to your house for as long as you own the house, plus 6 years after.   Make the best guess you can, but beware that if audited, the IRS does not have to award any basis adjustment you can't prove.  

[Anonymous]

since you both meet the rules for the maximum exemption, the first $500,000 of gain is excludable (not taxed at least for federal purposes).  so if you sold net for not more than that (gross sales price less selling expenses), you will not be taxed on any gain.   basis in this case is irrelevant so do the best you can to estimate but don't worry or spend a lot of time trying to get an "accurate" number.   .